Stocks Hold Gains as Oil's Fall Continues

Updated from 10:37 a.m. EDT

Stocks in New York were lately off their early highs but still marking substantial gains after a weaker-than-feared Hurricane Gustav failed to cause major oil-supply disruptions, sending the price of crude substantially lower.

The Dow Jones Industrial Average soared 186 points to 11,730, and the S&P 500 jumped 13 points to 1295. The Nasdaq added 24 points to 2392.

As trading got underway for the Labor Day-shortened week, the price of crude oil was plummeting $6.26 to $109.20, after Gustav hit the Louisiana coast but largely spared New Orleans and energy-production facilities in the area. Gold was down $31.60 to $803.60.

"I think you're going to see a continuation of the selloff [in oil], which obviously is beneficial to equities in the short term," said Chris Johnson, CEO and chief investment strategist at Johnson Research. He said that on a technical basis, the next important price levels for crude are $100, then $90.

Johnson said that speculative money has largely left the oil trade. "This group ... went from being net long to net short in about a week or so," he said. "The speculators are the first ones out. Now everybody else is going to get out." He said that the decline in oil prices will benefit equities as money that had sat on the sideline or been in commodities will need to find another place to go.

As for corporate news, Internet company Google (GOOG Quote) said it will develop its own Web browser in an effort to compete with Microsoft (MSFT Quote).